(Advanced analysis)The equations for the demand and supply curves for a particular product are P = 10 − 0.4 Q and P = 2 + 0.4 Q, where P is price and Q is quantity expressed in units of 100. After an excise tax is imposed on the product, the supply equation is P = 4 + 0.4 Q. The equilibrium quantity before the excise tax is imposed is

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Quizplus · Accepted Answer

The equilibrium quantity is found by setting the demand and supply equations equal to each other and solving for Q. Before the excise tax is imposed, the demand and supply equations are P = 10 − 0.4 Q and P = 2 + 0.4 Q, respectively. Setting these equations equal to each other, we get 10 − 0.4 Q = 2 + 0.4 Q, which simplifies to 0.8 Q = 8, so Q = 10. Therefore, the equilibrium quantity before the excise tax is imposed is 1000 units.

(Advanced Analysis)The Equations for the Demand and Supply Curves for a Particular